Working with others to reduce your anti-money laundering compliance costs

More businesses and professions now have to put systems and processes in place to help tackle money laundering and financing of terrorism – but you may be able to keep down your compliance costs by working with others.

If your business provides the types of services that criminals might use to launder money or finance terrorism, you have to comply with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.

To find out if you’re covered by the Act and the measures you need to put in place, see the information specific to your business at:

Tacking money laundering and terrorist financing

For example, businesses that deal in high value goods won’t have to do anything if they don’t accept cash payments of $15,000 or more.

If you do have AML/CFT responsibilities, you don’t necessarily need to do them all by yourself. You may be able to share some of the costs with related businesses (for example, if you’re a subsidiary or part of a franchise).

You could:

Form a designated business group (DBG)

This is 2 or more businesses or people who agree to share AML/CFT obligations such as:

  • their AML/CFT risk assessment
  • tasks such as customer due diligence (that is, checking and verify customers’ identities and/or sources of funds), record-keeping and account monitoring
  • filing suspicious activity and prescribed transaction reports with the Police Financial Intelligence Unit, and
  • annual reporting.

This may be an option if you already share back-office functions with a related business or you operate under a single brand. For example, related law or accountancy firms or subsidiaries, and real estate agents who are members of a franchise might decide to form a DBG.

The DBG agreement must be in writing and you must inform your AML/CFT supervisor.

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Rely on another business for customer due diligence (CDD)

If another business also has a relationship with your customers, you may be able to rely on it to carry out CDD for you if that business agrees to. However, you can only rely on it if it:

  • is also a New Zealand business or professional that has to comply with the AML/CFT Act, or is based overseas and has similar obligations in a country with sufficient AML/CFT controls
  • already has a relationship with your customer and has carried out CDD to the required standard
  • can immediately give you its CDD documents when you ask for them.

This may be an option if you have existing agreements or business relationships with other reporting entities. For example, a real estate agent and a conveyancer may agree that only one of them carries out CDD in a real estate transaction.

If you rely on another business, you’re still legally responsible for ensuring the CDD meets the required standard (unless you use an approved entity to conduct CDD – this will be detailed in regulations).

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Outsource CDD to a third party

You can authorise another person or business to act as your agent to carry out CDD, or to get the necessary information from customers.

This may be an option if someone else usually deals with customers face-to-face for you and can verify their identity. For example, a lawyer or an accountant could appoint an agent in a city where they don’t have an office.

You’re still legally responsible for ensuring the CDD meets the required standard.

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Where can I get more information about these options?

For more information about these options, see your supervisor.

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